Broadcom's hostile takeover bid for chip-making rival Qualcomm has become even more hostile now that a US national security agency over the weekend ordered Qualcomm to delay a shareholder vote scheduled for March 6 that would have set the direction of the proposed $117 billion deal.
Over the weekend, Broadcom was told that Qualcomm filed a voluntary request with the Committee on Foreign Investment in the US (CFIUS) to investigate the acquisition's potential national security issues.
Broadcom wants to take over Qualcomm, most recently offering $79 per share, or $117 billion in total, and putting up a slate of candidates for election to Qualcomm's board.
Broadcom's six nominees for Qualcomm's board are up for a vote at the meeting, and if they are all elected they would represent a majority of the 11-member board.
With CFIUS examining the deal, Qualcomm now can work to close its pending $43 billion acquisition of NXP Semiconductors to diversify its business beyond smartphones, attempt to make progress on patent licensing disputes with Apple and try to construct a stronger case to shareholders to remain a stand-alone company, said Rasgon.
The company added that the US Securities and Exchange Commission (SEC) has cleared Broadcom's preliminary proxy statement, and as Broadcom has pledged to redomicile to the US - and its board is made up of individuals which are nearly all American - CFIUS does not have to be involved in this transactions. Qualcomm has made it clear in the past that it does not want to sell itself to Broadcom, noting that such a deal would be placed under regulatory scrutiny.
Weeks of thrust and parry, along with tactical public statements, have left the companies' boards at odds over the unsolicited offer.
The Broadcom / Qualcomm deal has been making headlines for quite some time now. Despite those issues, Qualcomm officials have met with Broadcom executives and last month kept open the possibility of continued talks over price and other concerns.
Broadcom's initial offer already was tinged by politics, coming as it did the day after a White House meeting between Trump and Broadcom CEO Hock Tan, who promised to repatriate the company's headquarters. This brings Qualcomm's "engagement theater" to a new low, " Broadcom said.
Analyst Patrick Moorhead of Moor Insights & Strategy questioned the wisdom of Broadcom buying Qualcomm.
Qualcomm shares are down 0.6% to $64.34.
Broadcom noted in its statement that it has "committed" to redomiciling in the United States, that the process is "well underway" and that Broadcom (currently based in Singapore) expects to be a USA -based firm by the end of its second fiscal quarter on May 6, 2018.